The determinants of cross‐border bank flows to emerging markets |
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Authors: | Sabine Herrmann Dubravko Mihaljek |
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Affiliation: | 1. Economics Department of the Deutsche Bundesbank, , Frankfurt am Main, Germany;2. Monetary and Economic Department, Bank for International Settlements, , Centralbahnplatz 2, Basel |
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Abstract: | This paper studies the determinants of cross‐border bank lending on a panel dataset comprising 17 advanced and 28 emerging market economies from 1993 to 2008. The empirical framework is based on a gravity model of financial flows. Our main findings are that the decrease in cross‐border lending in the 2007–2008 crisis was mostly due to global rather than country‐specific risk factors, and that central and eastern Europe was less affected by this decrease than other emerging market regions because of its stronger financial and monetary ties with creditor countries, and its relatively sound banking systems. These results are fairly robust to several different specifications, sub‐samples and econometric methodologies. |
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Keywords: | Cross‐border lending financial crises emerging market economies international banking spillover effects gravity model |
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